Rusta AB (publ)

Good morning and welcome to the presentation of Rusta's second quarter. That is demands from August until October in our fiscal year that runs from 1st of May until end of April. Presenting will be myself, Göran Westerberg, CEO of Rusta, and our excellent CFO, Sofie Malmunger. The agenda today is short and sweet. We will start with the business update to bring you up to speed on what has happened during the quarter. We will then dive deeper into the financial performance with Sofie and then we'll summarize, talk a bit about current trading and finally open up for Q&A. Right, so moving on to the business update. First of all, I think, as usual, it's good to have a look at our store network. And we have, during the quarter, opened up five stores, plus another one after the end of the quarter, bringing the total up to six new stores since we last spoke. Three of them in Finland and another three in Sweden, bringing the total up to 231 stores as of now. At the same time, I can say that we have had a continued positive inflow of new stores, bringing the pipeline up to 48 new stores. This is a new all-time high, and I think this is on the back of a continued soft market for rental, making it possible for us to sign contracts on good commercial terms in areas that we've been looking for a long time. That also means in summary that in our guidance of openings in the coming three years, 50 to 80, we reiterate that we are very comfortable with the guidance that we will be somewhere in the upper end of that guidance span. Moving on to the numbers for Q2, we had a growth of 9.3% and a like-for-like comparable growth of 5.6%, both of those numbers excluding currency effects. We had a gross margin of 44.8% and an EBITDA margin of 6.7%. Looking at what kind of drove all of these numbers, you can say that one of the things is that we had increased sales in all segments during quarter two. We also had increased profitability across all segments. And part of the things that drove this, if we look a bit under the hood of these numbers, you can say that we had more customers, more tickets. We also had a higher average ticket. And this was in part due to customers climbing higher up in the price ladder, basically buying more higher ticket items. So all of this compounded drove both top line, but it also had a positive mix effect on gross margin. So you could say that a very well commercially executed Q2 with good offers, both good campaigns, effective campaigns, but also a very strong assortment combined with a more positive customer sentiment drove both top line and gross margin development. The gross margin jumped by 0.9% up to 44.8% and the EBITDA actually increased by a whole 45.6% and naturally we're very happy about that. Moving on to the consolidated numbers, we had 7.5% for the first half of the year, 3.3% for like, again excluding currency effects. We have an accumulated gross margin of 43.6% with a positive trend and a 7.8% EBITDA margin. So accelerated sales and volume on the back of the strong commercial execution and I think that's also one of the important parts that I would like to underline. For quite some time we've had volume development actually that we're selling more pieces. This is very important for our business model because it drives scalability, it drives our purchase power towards our suppliers. So basically this is also good under the hood for Rusta as our business model basically thrives when volume growth is really strong. All the growth initiatives that we have rolled out during the past year and also during the second quarter performs well and according to our guidance. And the most important part of that that has had an impact during Q2 is the rollout of the new store concept that was completed during the quarter. We had an increased gross profit by 5.2% and we have a positive trend on sales and margin. Looking at some of the key events, I mean, there was a lot of things going on during the quarter, but to pick out a few things, one of the things that I would like to underline is, of course, the expansion pipeline that we continue to draw benefits from the weaker general economy that has been around for some time now, giving us more opportunities to find locations where we want them, but also on terms that are commercially acceptable for us. So I think that will support our growth long term. And I think if the consumer sentiment is now also improving more clearly, I think the combination of this bodes really, really well for the coming years. Also, the store concept renewal has been completed on time and also within budget. It's receiving good feedback both from our employees operating the stores but also from our customers visiting their stores. And perhaps more important for this call, it also performs according to the guidance that we have reiterated for the past couple of quarters. So I think this is really good and it's also the first time that we have done a store concept renewal so fast and at such a low cost ever in the company. So this is now completely rolled out in all of the 231 stores that we have. Earlier we also announced that we had implemented the bonded warehouse that gives us some benefits on the cost side towards Norway. This has also been a very important part of making it possible for us to launch online in Norway with the deliveries over there. So during quarter two, we also launched online in Norway, meaning now that we have online in all of the Nordic countries, Sweden, Norway and Finland. The fourth thing that I would like to bring up is if you remember we had an IT incident early in last calendar year and of course that led us to review the setup and one of the things that we concluded was that we should not have all of our eggs in one basket, making a more diverse basket of suppliers, IT suppliers, a better choice. That is now fully implemented, the old solution and the old supplier has now been phased out and we now have a new setup in place and that is delivering as we expected and it's now stable. I can also add the fifth thing that we don't have over here, but that we've also written in the report, and that is that the inflow of new customers, the recruitment of new customers also continues. So we now have over 6.7 million fully registered Club Rusta members. And again, I think this is also very positive for the future that we have actually new people coming into the Rusta stores. And with that, I would like to hand over to Sofie to look more into the financial performance.

Sure. Okay, so as Göran has showed you, Rusta had a strong second quarter with increased sales and improved profit. We have a total net sales growth of 8.3%. Currency effects had a negative impact of minus 1.1% during the quarter. So the net sales excluding currency effects increased to 9.3%. The like-for-like growth excluding currency effects was 5.6%. This is an effect of both more customers and a higher average receipt. Our strategic initiatives such as the updated store concept has had a positive effect on our sales. In addition to the strong sales, we have a gross margin that has increased with 0.9 percentage points, which is an increase of 10.4%. This is mainly due to positive mix effects and effective campaigns, which offsets the continued negative impact on the gross margin due to currency. Our EBITDA margin is 1.7 percentage points stronger than the same quarter last year, which is an increase in EBITDA by 45.6%. The increase is primarily due to the strengthened gross margin. We see a strong performance across all our segments both in net sales growth and in profit. The numbers you see here for sales exclude currency effects. The largest growth was noted in Sweden where improved market conditions clearly indicate an increased readiness to buy among our customers. The sales growth for Sweden was 11.5% and like for like 6.5%. The profitability increased with 2.5 percentage points to 18.2%. Rustas positive performance in Norway has continued for several quarters and we are noting strong growth in sales and in the number of customers. Readiness to buy is rising and customers are increasingly choosing products in higher price ranges. The sales growth for Norway was 8.9% and like for like 6.5%. The profitability increased with 1.7 percentage points to 10.5%. Our third segment, other markets, consists of Finland, Germany and online. And our online sales are now available in Sweden, Finland and Norway. During our first quarter this year, the other market segments was weighted down by Finland, where we saw a damped summer sales. This has not continued during the autumn. Instead, we see positive development. Net sales growth excluding currency effects was 4.8% for other markets, of which like-for-like growth excluding currency effects was 1.9%. The profitability increased with 1.2 percentage points to 1.1%. So our profitability in the second quarter has increased compared to last year, which is primarily due to a well-executed campaign strategy and positive mix effects in the product assortment. This has a positive impact both in sales and in gross margin. We see a clear volume increase both in total and in like-for-like sales. The gross margin is also positively affected by lower sea freight costs than last year, and we also are starting to see lower costs for duty to Norway, thanks to our bonded warehouse. The operating expenses has increased compared to last year, but this is all in line with our plans. It's explained by extra costs related to our growth initiatives and higher reservations for variable remunerations. There is still a negative net effect in the quarter due to currency, but it's our belief that the currency effect peaked during Q1 and that it will now strengthen our profitability during the second quarter of our financial, sorry, second half of our financial year. So to summarize, the EBITDA development, we can clearly see that our growth initiatives in sales, the positive development in gross margin from effective campaigning and pricing drive our growth and increase our EBITDA margin with 1.7 percentage points in the quarter. And then some comments on our balance sheet and cash flow. The increase in working capital is a planned inventory build up due to more stores and increased demand. Net depth excluding IFRS amounted to, IFRS 16 amounted to 255 million SEK compared to 18 million SEK. An increase primarily due to the financing of optimization investment in the distribution center and also in the growth initiatives. Cash flow from operating activities increased and amounted to 151 ms compared to minus 2 ms last year for the quarter. The improvement was due to stronger operating profit and a lower increase in inventories compared to last year. cash flow from investing activities in the quarter was marginally higher than in the previous year mainly due to an increase in our strategic investments during the quarter all in all we continue to have a solid balance sheet and a stable financial position which will support our future growth We are on track and remain committed to deliver on our mid-term financial targets. During the quarter, we paid out dividend corresponding to 47% of the net profit, which is at the upper end of our dividend policy. And this is made possible by the strong financial position where we can both invest in future growth and at the same time increase the dividend to our shareholders. And with that, I hand over to Göran.

Thank you. Right. And then to summarize and also talk a little bit about current trading, I think most importantly, as I'm sure most of you have noticed, we announced a new CEO last week. And as you know, as I'm sure you remember, I resigned before the summer. And now we have actually the final decision here on a new CEO. which is Katrin Wigsell from H&M that will step in as CEO as of 1st of June 2026. Which means that we have plenty of time now for a good solid handover until it's time for her to carry on with the work with Rusta. And also just to preempt any worries or question marks on that, that the Rustas growth strategy as it is expressed in our vision is still varied and also the financial targets that Sofie also just presented is also very much valid and will of course remain. When it comes to current trading, we've had a good start of the Christmas sales and sales in November was well in line with the positive trend that we have seen in the second quarter. On top of that, we've also seen that November and December is the two most important sales months during the year. And November with Black Week has become more and more important over the past few years. So you'll be happy to know that this year we had record sales during the Black Week. To summarize it, we can say that we reiterate our guidance. One of the most important things when we talk about margin is the currency effects. We have now carried the brunt of the negative effects basically from top line selling in euros and the Norwegian crown. This is what hit us the first and that effect, that negative effect peaked during Q1 and it has receded. It's still negative but it has receded into Q2 and it will turn into positive in the second half beginning in Q3. We also see that what is driving this is the dollar effect. It's basically the Swedish crown being much stronger to the dollar is now going to give us that positive effect. And that's in purchasing, it's in transport and so on. And all things being equal, that positive effect is actually bigger than the negative effect that we've seen from the top line headwind. All projects on track in line with previous guidance. So I think across the board, when we look at what we're investing in, in the distribution central, the new concept that we rolled out, the opening of new stores and so on, we feel very comfortable and confident that our guidance holds true. So with that, I would like to open up for Q&A.